Tech Sector Set To Regain Momentum

Market Review

Malaysia: The FBMKLCI (+0.64%) extended its gains for the third session and closed higher at 1574.51 pts, buoyed by gains in GAMUDA (+20.0 sen) and YTLPOWR (+13.0 sen). All the sectors ended the session in green, with the Construction (+2.76%) sector gaining the most.

Global markets: Wall Street closed higher, supported by falling Treasury yields and gains in tech stocks. Similarly, the European market edged higher, with traders focusing on corporate earnings, while the Asian market gained momentum as investors shrugged off Trump's China tariffs and China's retaliatory measures.

The Day Ahead

The local bourse nudged higher as data centre-related counters regained traction for the session. In the US, Wall Street continued its upward strength for the third day, buoyed by gains in Nvidia and Super Micro. The falling Treasury yields driven by softer ISM Services PMI, have further boosted the interest rate-sensitive tech sector. Following that, traders will continue to monitor the initial jobless claims later today. In the commodities market, Brent crude oil dipped towards USD74.6 per barrel following the increase in crude oil inventories, while gold prices continue to chart new all-time high at USD2,867. CPO prices held above RM4,300 despite a minor pullback.

Sector Focus: Given that President Trump has maintained his 10% tariff on China's products, we opine that the local Gloves and Technology counters may trade higher as the trade war persists. Meanwhile, bargain-hunting opportunities may extend in the Construction sector, as JSSEZ developments and Malaysia's ongoing data centre boom. Besides, traders may focus on high-dividend-yield sectors like Banking and REITs, given the prevailing uncertainty and expectations of a stable 3% OPR throughout the year, alongside higher reported net income recently from REITs.

FBMKLCI Technical Outlook

The key index rebounded and hit the EMA20, with technical indicators showing recovery signs whereby the MACD histogram approached zero, while RSI trending off its oversold zone. Resistance is anticipated around 1,589-1,594, while support is set at 1,554-1,559.

Company Briefs

KLCCP Stapled Group's (KLCC) net profit for the fourth quarter ended Dec 31, 2024 (4QFY2024) rose 12% to RM430.91m from RM384.59m a year earlier, driven by full ownership of the Suria KLCC Mall and higher fair value gains. Revenue increased 3.72% to RM459.1m from RM442.63m, thanks to higher rental rate revision and improvement in occupancy rate to 99% from 97%. The group declared a fourth interim dividend of 17.1 sen per stapled security, payable on Feb 28. This brings the group's total dividend payout for FY2024 to 44.5 sen per stapled security - a record high since listing in 2013 and a 9.9% increase from 40.5 sen in FY2023. Net profit for FY2024 as a whole rose 9.15% to RM1.02bn from RM931.29m in FY2023, as revenue rose 5.66% to RM1.71bn from RM1.62bn. (The Edge)

Gamuda Bhd (GAMUDA) has signed an exclusive agreement with the Perak government to facilitate raw water transfer from Sungai Perak to Bukit Merah and develop the requisite infrastructure for treated water distribution, ensuring long-term water. The parties will proceed with an official joint venture at a later stage. Under the agreement, both parties will jointly manage all components of the water infrastructure, including overseeing the design, civil and structural engineering, utilities, risk mitigation and the implementation of local workforce and technology training programmes. (The Edge)

ITMAX System Bhd's (ITMAX) 65%-owned subsidiary Southmax Sdn Bhd has secured another contract in Johor to operate an outdoor parking system in the Pontian district. The appointment took effect from Feb 1, 2025 and spans 15 years. The contract value was not disclosed. Southmax will operate on a revenue-sharing model and will receive 70% of the revenue generated from parking collections and parking compounds while the remaining 30% will accrue to the Pontian Municipal Council, the local authority that administers the district. (The Edge)

CapitaLand Malaysia Trust (CLMT) is buying three industrial properties located in the Senai Airport City for RM72m from Gromutual Bhd's (GMUTUAL) subsidiary Rainbow Entity Sdn Bhd. The acquisition is conditional upon the vendor, Rainbow Entity, completing the construction of the three factories at its own cost and obtaining the necessary approvals and the issuance of the Certificate of Completion and Compliance before April 30, 2025. Upon completion, CLMT will enter into a seven-year lease agreement with a tenant that is in the life sciences industry and listed on the Shanghai Stock Exchange STAR Market for one of the three properties. When the three properties are fully leased, CLMT is expected to generate an annual gross rent of RM5.1m, with a first-year gross yield of approximately 7.1%. (The Edge)

YTL Corp Bhd's (YTL) Singapore-listed industrialised building systems (IBS) unit NSL Ltd has received a four-month extension until June 6 to adhere to the Singapore Exchange's (SGX) 10% public shareholding requirement. In October last year, YTL Cement Bhd, a unit of YTL Corp, bought an 81.24% stake in NSL for S$227.61m (RM792.32m), or 75 cents (RM2.61) apiece, from 98 Holdings Pte Ltd to expand its IBS business. The stake purchase triggered a mandatory unconditional cash offer for the remaining NSL shares at the same price. In the offer document, YTL Cement announced its intention to maintain NSL's listing on SGX. At the offer's close on Nov 8, 2024, YTL Cement, together with persons acting in concert, controlled a 91.02% stake in NSL. (The Edge)

Citaglobal Bhd (CITAGLB) has no immediate plan to develop the 1.58-acre land at Jalan Tun Razak, Kuala Lumpur that it intends to acquire from Bank Islam Malaysia Bhd (BIMB) for RM73m. It said this strategic approach is to maximise long-term value creation of the land. Independent valuer Infra Harta Consultants Sdn Bhd ascribed an indicative market value of the land at RM70m on an 'as-is' basis and RM138m on an assumption basis - assuming it is approved for mixed commercial development, the current express condition is revoked, and the lease period is extended to 99-year leasehold tenure. (The Edge)

Hextar Industries Bhd's (HEXIND) independent non-executive chairman Datuk Chan Choun Sien has stepped down from his post "due to other commitments". The 54- year-old was redesignated as chairman in October 2018, back when the group was called SCH Group Bhd. (The Edge)

Source: PublicInvest Research - 6 Feb 2025